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Simplified Sanctions Screening Within SAP: Explained With Tangible Use Cases

September 6, 2023

by

Paul Dixon

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SAPCompliance

Here is a truth within the world of sanctions compliance: The industry is full of long acronyms, complicated legal language, and ever-evolving regulations. And it's all too easy to get lost in the abyss. If we add technology into the mix, things get even worse!

This VOQUZ Labs article puts in plain language how integrating sanctions screening within SAP works - by providing tangible use cases.

But before we do that, let's remind ourselves why effective sanction screening processes are more critical than ever.

The Stakes Are Rising for Breaking Sanctions Laws

Over the last few years, global sanctioning bodies, such as OFAC in the US and OFSI in the UK, have toughened sanctions enforcement. And they've cumulatively issued billions of dollars in penalties for violations. In 2023, well-known multinationals such as Microsoft, British American Tobacco (BAT), and Deutsche Bank received hefty financial punishments for sanctions breaches.

But failing to have an effective sanctions screening process doesn't only mean monetary punishments if violations occur. It also means your organization, a brand that perhaps spent decades building a trustworthy reputation, is negatively splashed all over the media.

Only last week (at the time of writing), the UK's Office of Financial Sanctions Implementation (OFSI) used Disclosure Power for the first time. The power, in brief, allows OFSI to publish details publicly of sanctions breaches, even if the offense was not severe enough to justify a civil monetary penalty.

Wise, a UK-based foreign exchange financial technology company, was on the receiving end of this 'naming and shaming' policy from OFSI. From CNBC to national newspapers, Wise appeared negatively in stories (its share price even dropped) that revealed it let an individual on the UK's Russia sanctions list withdraw £250 ($316) from a business account.

And the reality is this: The stakes are rising for non-compliance with sanctions laws.

Integrating Sanctions Screening Within SAP Is a No-Brainer

Integrating automated sanctions screening is becoming crucial for organizations using SAP ERP or S/4HANA as their enterprise resource planning system.

You can learn all about it in this guide - Integrating Sanctions Screening in SAP: Here Are Immediate Benefits You Should Know.

But in a nutshell, this is how it works:

  • A light-weight plugin is added to your SAP system
  • The plugin connects securely to global sanctions databases through an API
  • All your business partner and employee data is automatically screened against all major international sanctions lists within SAP

Anything that is this easy to implement and significantly mitigates the risk of breaking sanctions regulations should be embraced by all organizations.

But how does automated sanctions screening within SAP work on a practical level?

BROCHURE – the benefits of our products!

remQ - Turn compliance into a cost saver!

Organizations are increasingly exposed to compliance requirements. Adopting innovative ways to assess and manage risk and enhance performance is critical. That’s where data analytics and continuous monitoring are helping to simplify and improve the internal control system, increase operational efficiencies, reduce costs, and detect fraud and errors earlier. Internal controls become a way for organizations to create value.

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We will now reveal and explain two tangible use cases.

Use Case 1: Customer Onboarding and Continuous Monitoring

As you chose to read this article, your organization likely uses SAP as its Enterprise Resource Planning (ERP) system. Therefore, you also understand that SAP Customer Master data is critical to your business operations. And it's not just critical - it's the central nervous system.

So wouldn't it be helpful to perform real-time automated sanctions checks of this data while it constantly updates? Yes, it would. And your company can do that by using a sanctions screening SAP plugin, such as remQ by VOQUZ Labs.

We can make a use case by discussing the recent OFSI punishment of Wise in the UK (August 31, 2023). As we already know, Wise allowed a customer appearing on UK sanctions lists against Russia to withdraw £250 ($316).

This withdrawal took place the day after the person had been designated.

It's important to note that we do not know the case's specifics, and the following is just speculation. However, there was possibly a delay between the sanctions update issued by the UK government and the implementation of these updates within Wise's operational systems.

Again, we can only hypothesize as to what happened. But generally, the advantage of performing sanctions checks on SAP Customer Master data (on the central nervous system itself) is that your organization will be better prepared to respond swiftly to changes to global sanctions lists - significantly reducing the risk of non-compliance.

Use Case 2: Supply Chain and Subsidiaries Risk Management

Over the last few years, the US's Office of Foreign Assets Control (OFAC) has become more transparent in revealing why organizations receive sanction violation penalties.

In their Settlement Agreements with respondents who breached US sanctions laws, a pattern is emerging: International businesses and organizations' global supply chains are at high risk for sanctions breaches.

Large corporations with subsidiaries in parts of the world far away from the watchful eye of the head office also face increased risks. For example, in April 2023, British American Tobacco was fined a jaw-dropping $629 Million for North Korean sanctions breaches - through its subsidiary in Singapore.

Once again, organizations that perform sanctions screening processes within their SAP system - inside the backbone of their business operations globally - are better equipped to see the red flags far sooner and take appropriate action.

Recommended reading: Why You Need Business Partner & Sanctions Screening in SAP - and How to Set it up

WHITE PAPER – enhance your knowledge!

Why You Need Business Partner & Sanctions Screening in SAP - and How to Set it up

This paper discusses the nature and importance of financial and trade sanctions and sanctions screening. Sanctions are measures implemented by governments to restrict or prohibit trade with parties involved in illegal activities, while sanctions screening is a process that detects potential matches between organizational operations and global sanctions lists. Despite its simplicity, sanctions screening is complicated by multiple variables such as international languages, culture, spelling, aliases, and technological limitations.

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Closing Thoughts and How remQ Can Help

This article revealed two tangible use cases for performing automated sanctions screening within SAP.

But it's important to remember this: All data in SAP (master and business process) covering areas from payroll and employee data to purchase order and customer relationship management (CRM) information - and much more - can go through automated sanctions checks in real time.

And what does that mean?

By implementing automated sanctions screening within your SAP system, your business can achieve a comprehensive and proactive approach to sanctions compliance.

You can learn how to set this up and read further information in this VOQUZ Labs White Paper, which walks you through the process. Download it here.

VOQUZ Labs remQ Business Inspector software operates as a SAP add-on with a library of 100+ pre-built shipped controls ready to run. You can click here to learn more about how remQ can assist your business with its goal of staying sanctions-compliant.

ABOUT THE AUTHOR

Paul Dixon

Paul is a RegTech content writer & strategist with extensive experience in digital marketing and journalism. His work has appeared in the Guardian newspaper. He also holds a degree in International Relations, where he studied global sanctions compliance and cross-border finance.

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